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Dollar Yen – 2nd March 2009

Dollar Yen Weekly Candle Chart - 2nd March 2009

Dollar Yen Weekly Candle Chart - 2nd March 2009

The breakout to the upside that we saw two weeks ago, continued last week with strong momentum in the volume, and a wide spread up candle on the week, which provided significant trading opportunities on an intra day basis. As I mentioned some time ago, I entered the market with a long position some weeks ago, and am now waiting for an exit signal in the weekly chart before closing out. With prices now having crossed both the 9 week and 14 week averages, there is nothing in the charts at present to suggest any short term reversal, but after such a strong rally in prices last week, it would not be a major surprise to see some profit taking in the early part of the week, and as a result I have tightened my trailing stop loss to the $95.20 region. My initial target for the trade was $98.50 with a longer term of the pair breaching $100 again in the next few weeks, and with the 9 week and 14 week averages now crossing this could be achieved sooner rather than later. As always I would suggest using the daily charts for you entry and exit points.

The main fundamental news comes this afternoon from the US in the form of the ISM manufacturing data, with a forecast of 34.0 against a previous of 35.6. This is a survey is conducted amongst 400 purchasing managers, and provides a leading indicator for the health of the economy with a figure below 50 showing an economy in contraction, and above this number in expansion. If the actual is better than forecast, then this is generally good for the home currency, in this case the US dollar. All the latest economic news is available in the economic calendar, and for the latest prices, please just check the live currency charts, along with the live news, or check with your ECN broker.

The short term and medium term outlook is bullish, and the long term is sideways.